business process management

20Chapter 6 Why are organizational strategy and process architecture important in BPM Chapter 9 What are the critical implementation aspects for a BPM solution?. Business process reengi

Business Process Management

i

To our families

Yvonne, Brittany, Connor, Cassie and Kurt

and Sandra, Angelique and Mystique Without the support and inspiration of our families this would not have been possible;

we know it has been tough at times, your understanding will never be forgotten Thank you

We will now endeavor to make up the time we have lost with you.

John and Johan

ii

Business Process Management

Practical Guidelines to Successful

Implementations

John Jeston and Johan Nelis

AMSTERDAM BOSTON HEIDELBERG LONDON NEWYORK OXFORD

PARIS SANDIEGO SANFRANCISCO SINGAPORE SYDNEY TOKYO

BUTTERWORTH-HEINEMANN IS AN IMPRINT OFELSEVIER

iii

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iv

Chapter 3 Why is it important to improve business processes before automating them? 12

Chapter 4 When should you do BPM – what are the main drivers and triggers? 16

v

Chapter 5 Who should be involved in BPM? 20

Chapter 6 Why are organizational strategy and process architecture important in BPM

Chapter 9 What are the critical implementation aspects for a BPM solution? 38 Chapter 10 Why do you need a structured approach to implementing BPM? 40

Process architecture outputs 98

Chapter 21 Realize value phase 215

What are the results of embedding BPM into the organization? 317

Appendix J: Sustainable performance phase 401

years, covering project management, business process management, businessprocess reengineering, systems development, outsourcing, consulting andgeneral management In addition to his consulting roles he has held the posi-tions of financial controller, divisional manager, director of a software com-pany, HR director, and CIO

Recently, John has specialized in business process management strategyand implementations, and is a lead consultant with TouchPoint’s BPM deliv-ery practice His current role includes strategic advice on BPM to large organ-izations, predominantly in the finance industry, and managing TouchPointconsultants in the implementation of various BPM projects He has presentedand held workshops at several BPM conferences over the last three years John

is an author and course director of a BPM distance learning program inAustralia (jcjeston@bigpond.net.au)

Management Consultant He has established and managed a BPM practice ofthirty consultants in the Netherlands, and also co-founder and Vice Chairman

of the Dutch BPM Forum Johan has worked for the United Nations as anAdvisor He is well known for his drive to transfer knowledge and experiences,and has shown that he is capable of motivating and stimulating people Hehas initiated many BPM training courses and lectured at a postgraduatecourse

Johan has carried out assignments in a wide variety of sectors, with themain emphasis on finance and telecom He specializes in aligning processeswith strategy, business objectives and IT He has also performed many processaudits, and is able to pinpoint fundamental problems, formulate quick wins,and provide innovative and sustainable solutions Furthermore, he is good atinitiating and overseeing implementations of BPM and ensuring that the peo-ple are able to perform their activities better and independently Johan is nowlead consultant at TouchPoint, where he provides strategic advice on businessprocess services and supervises a team of BPM consultants He has presented

at seminars and hosted workshops at several BPM conferences in Europe andAustralia Johan is an author and course director of BPM distance learningprograms in The Netherlands and Australia (johannelis@yahoo.com.au)

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Frits Bussemakerhas been working in the IT industry since 1988 He hasheld various senior commercial positions with companies including Logicaand Cambridge Technology Partners He is currently Strategic AllianceManager with TIBCO Software in the Netherlands In 1999 he founded andwas Chairman of the Dutch chapter of the Association for Strategic AllianceProfessionals (www.strategic-alliances.org) He is also the founder andChairman of the BPM-Forum Netherlands (www.bpm-forum.org), which wasfounded in 2003 The BPM-Forum is the neutral expert platform on BusinessProcess Management in the Netherlands Frits sits on the Board of Advice of

the BPM-Forum Belgium, and is a columnist in Business Process Management

Magazine and bptrends.com He has an MSc from the University of Delft.

Brisbane, Australia, where she is researching business process managementmaturity Following her acceptance as a CPA in 2001, Tonia obtained a MITfrom QUT in 2004 Tonia has an extensive background in the financial serv-ices sector, where she has worked for more than fifteen years as both a man-ager and a consultant Experience managing process improvement projectshas seen Tonia develop a strong interest in the relationship between businessprocesses and IT

Center at Babson College With over 20 years of management consulting andresearch experience across a variety of industries around the world, headdresses the important business opportunities and problems of clients bycombining human, technological and business perspectives From 1981 to

1997 Brad worked for CSC Index, the business reengineering firm In tion to leading many process-innovation consulting projects he led CSCIndex’s research service in business reengineering for three years, workingwith over thirty senior executives leading major reengineering initiatives, andthe founders of business reengineering Brad has an MBA from UCLA and a

addi-BS from Stanford University

of the Business Process Management Group at Queensland University ofTechnology, Brisbane, Australia He received his MBA (1992) and his PhD(1995) from the University of Muenster, Germany His main areas of interestare business process management, business process modeling, enterprise sys-tems and ontologies In his current research projects he is exploring, amongothers thing, the critical success factors of process modeling, issues related toprocess modeling in the large, and the actual application of process model-ing Michael has intensive consulting experience, and has provided processmanagement-related advice to organizations from various industries includ-ing telecommunications, banking, insurance, utility and logistics Besidesmore than forty journal publications, seventy conference publications andthirty-five book chapters, he has published two books on logistics manage-

ment and process modeling, and is editor of three books, Reference Modelling,

Business Process Management, and Business Systems Analysis with Ontologies He is

a member of the Editorial Board of six journals, including the Business Process

Management Journal.

This book shouldn’t be unusual, but it is It should have been written a longtime ago, but it wasn’t All books on business process management should besimilar to it, but they aren’t Books that purport to tell people in organizationshow to do something should be this clear, but they seldom are Process man-agement should have already been demystified, but it hasn’t been

What’s exceptional about the book is its extraordinary common sense Itsuggests seemingly prosaic ideas, such as that multiple different levels ofprocess change are necessary under different circumstances, and that tech-nology alone isn’t sufficient to bring about process change These ideas seemobvious, but they are not often encountered in the world of business processmanagement, or BPM In fact, in order for you fully to appreciate the virtues

of this book, you need to know something about what’s wrong with BPM

A brief history of business process management

The idea that work can be viewed as a process, and then improved, is

hard-ly new It dates at least to Frederick Taylor at the turn of the last century, andprobably before Taylor and his colleagues developed modern industrialengineering and process improvement, though the techniques wererestricted to manual labor and production processes The Tayloristapproaches were widely practiced in the early 1900s, but were largely for-gotten by mid-century

The next great addition to process management was created by the bination of Taylorist process improvement and statistical process control, byShewart, Deming, Juran and others Their version of process managementinvolved measuring and limiting process variation, continuous rather thanepisodic improvement, and the empowerment of workers to improve theirown processes It turned out that Japanese firms had both the business need –recovering from war and building global markets – and the discipline to putcontinuous improvement programs in place Other firms in other societieshave adopted continuous improvement and ‘total quality management’

com-xiii

based on statistical principles, but it requires more discipline than most canmuster.

Toyota, in particular, took these approaches and turned them into a tinctive advance in process management The Toyota Production System(TPS) combined statistical process control with continuous learning bydecentralized work teams, a ‘pull’ approach to manufacturing that minimizedwaste and inventory, and treating every small improvement in processes as anexperiment to be designed, measured and learned from But few firms havebeen able to successfully implement the TPS, and even Toyota has had moresuccess with the approach in Japan than at its foreign plants A somewhat lessstringent approach to the TPS is present in the ‘lean’ techniques that manyAmerican firms have recently adopted

dis-The next major variation on BPM took place in the 1990s, when manyWestern firms were facing an economic recession and strong competitionfrom global competitors, particularly Japanese firms Business process reengi-neering added, to the generic set of process management ideas, several newapproaches:

● the radical (rather than incremental) redesign and improvement ofwork

● attacking broad, cross-functional business processes

● ‘stretch’ goals of order-of-magnitude improvement

● use of information technology as an enabler of new ways of working.Reengineering was also the first process management movement to focusprimarily on non-production, white-collar processes such as order manage-ment and customer service It did not emphasize statistical process control orcontinuous improvement Many firms in the US and Europe undertookreengineering projects, but most proved to be overly ambitious and difficult

to implement Reengineering first degenerated into a more respectable wordfor headcount reductions, and then largely disappeared (though there aresome signs of its return)

The most recent process management enthusiasm has revolved around

‘Six Sigma’, an approach created at Motorola in the 1980s and popularized byGeneral Electric in the 1990s In some ways Six Sigma represents a return tostatistical process control; the term ‘Six Sigma’ means one output defect in sixstandard deviations of a probability distribution for a particular process out-put Six Sigma also typically involves a return to focusing on relatively smallwork processes, and presumes incremental rather than radical improvement.Most frequently, however, Six Sigma improvement techniques have beenemployed on an episodic basis, rather than continuously, and while employ-ees are somewhat empowered to improve their own work, they are generallyassisted by experts called ‘Black Belts’ Some firms are beginning to combineSix Sigma with more radical reengineering-like approaches to processes, orwith the ‘lean’ techniques derived from the Toyota Production System It issimply too early to tell whether Six Sigma will continue to prosper; I see somesigns of its weakening, but it is certainly still popular in many US firms.The approach to BPM described in this book is a welcome amalgam of all

of these previous approaches It doesn’t focus heavily on statistical processcontrol or bottom-up experimentation, but addresses the basics of process

improvement and change It doesn’t view IT as being the core of processchange, but doesn’t ignore it as did TQM and Six Sigma It considers all of themajor vehicles by which organizations understand, measure and change howthey work.

Lessons from history

What can we learn from this history, and how does it relate to the book youhave in your hands? First, it’s clear that process management has been some-what faddish in the past It has been a bit immature, coming and going in var-ious forms as a management fad This does not mean that there is no value tothe concept – indeed I am a strong believer in it – but rather that managersand firms may have latched onto the more fashionable, short-term elements

of the approach instead of the more timeless ones Some managers have evenmade comments to me such as the following: ‘We’re doing Six Sigma – we’renot really into process management’ This inability to see the forest for theindividual tree is problematic if (or, more likely, when) the appeal of an indi-vidual process management offering begins to fade

Perhaps the excitement of a ‘new’ approach (or at least a new combination

of previous ideas with a new name) is necessary to get people excited, but theproblem is that they become less excited after a time with each new variant ofprocess change Basic business process management – the essence of each ofthese faddish enthusiasms – may not be sexy, but it is clearly necessary.Perhaps it should be adopted whether it is sexy or not, and then maybe it willpersist over the long term at a moderate level of popularity This book isadmirably free of faddish elements, and provides a good guide to the basicprinciples of process management The authors refer to the ‘demystification’

of process management, and they are correct that the field has been clouded

by faddishness and mystification for far too long

It’s also apparent that process management, as it has changed over time, is

an increasingly synthetic discipline This book, I am happy to note, also takes

a synthetic, broad approach to process management Each new process agement approach has built on previous foundations, and added one or morenew elements Ideally, an organization would be able to draw upon all of theelements or tools available to meet the process management needs of anyindividual project However, to wrap all of the possible process managementtools into one consolidated approach would be a bit unwieldy They can’t allfit into one normal-sized book Therefore it seems likely that, in the future,firms will assemble the tools they need to address a particular project using acustomized or configured methodology Such a configuration process wouldrequire either very experienced process management consultants who couldassemble the proper tools, or perhaps even software that could help a lessexperienced user configure a methodology

man-Despite these methodological issues, process management all boils down tohuman change This is true of all variations on process management AsJeston and Nelis point out, people are the key to implementing new processdesigns If they don’t want to work in new ways, it is often very difficult to forcethem to do so Hence any successful process management effort requires a

strong emphasis on culture, leadership and change management Severalchapters of the book are devoted to these issues.

Process management doesn’t replace everything else in organizations, andit’s not a panacea There have been other authors and publications that havestrongly suggested that all an organization needs to do to be successful isprocess improvement This book does not make that mistake; it simply arguesthat process management must become one of the abiding approaches tomanaging organizations It must augment and align with strategy, humanresource management, financial management, information management andthe other traditional management disciplines This and other perspectiveswithin the book may appear to be only common sense They are indeed sen-sible, but they are not sufficiently common

Thomas H Davenport

This book began in 2003 when I was engaged in the early stages of a BPM ect within a large financial organization Over three decades of consultingand line management positions within both small and large organizations Ihave been developing my intuitive project management and business skills Iwas now struggling with how to help develop the skills of the consultants inour BPM consultancy practice faster than just ‘on the job training’

proj-I searched the internet and book shelves for a comprehensive text on ‘how

to successfully implement a BPM project’ I did not just want a big pictureview but a detailed step-by-step guide that we could give to our consultantsand clients, and one that would force me to be less intuitive (although I stillthink this is the most powerful insight one can have) and more formal inapproaching BPM projects So I started to document my thoughts over thenext 12 months

In mid-2004 we received the resume of Johan from the Netherlands Johanwas looking to migrate to Australia from the Netherlands where he headed upthe BPM practice of Sogeti (part of Cap Gemini) Johan had also been work-ing on the development of a framework for BPM projects Johan joined me inthe TouchPoint BPM consultancy practice and soon thereafter we began thejourney of completing this book

John Jeston

I have always found it amazing that in a time of information, the skills andexpertise of a BPM consultant are still predominantly based on experience,and grey hair is still an indicator of this BPM is still more an art than a sci-ence There are very few sources of information for people to rely on whendelivering a BPM project: there are very few good books which cover all therelevant aspects; internet searches are crowded with advertising of vendors;and few seminar or training courses live up to their promises

I have always been very passionate about exchanging expertise and ence – right from my first job at the United Nations Industrial DevelopmentOrganization which was not just about achieving results but also knowledgetransfer During my career at Sogeti B.V., The Netherlands, I enjoyed the sup-port and opportunities provided to develop process reference models and

experi-xvii

guidelines; give BPM training and lectures as well as setting up a BPM expertgroup and the Dutch BPM Forum Jeroen Versteeg and Klaas Brongers havebeen very supportive in this regard.

Writing a book which combines both a holistic view and the necessarydetails has been a long cherished dream When I joined TouchPoint, Australiaand John Jeston told me about his plans for this book and showed me the out-line of the Framework, I knew that this dream would be fulfilled

Johan Nelis

In almost every industry, globalisation is leading to overcapacity, which is leading

to commoditisation and/or price deflation Success, therefore, will go to the fittest – not necessarily the biggest Innovation in process – how things get done

in an enterprise – will be as important as innovation in the products a company sells.

(Louis V Gerstner Jr, 2002: 270)

Be careful of management buzzwords and techniques and the latest fads –EVA, TQM, Balanced Score Card, Benchmarking, BPR, Six Sigma and nowBPM – they all promise a lot and are often seen as a panacea Managers can hidebehind them and say, ‘Well, I applied it like I was told to and it still didn’t work’.These ‘latest techniques’ look simple to apply, but in real life they are com-plex Managers still need to look critically at their organization and applychange as ‘their’ organization needs it – custom-made

At a time of exceptional change within both organizations and society,there are a number of imperatives for executives and managers as they lead their enterprises beyond present boundaries into the twenty-first century They are:

● developing global capacity

● positioning for growth

● relentless business improvement

● managing from the outside in.

(Stace and Dunphy, 1996) Peter Drucker (1991; emphasis added) has stated that:

the single greatest challenge facing managers in the developing countries of the

world is to raise the productivity of knowledge and service workers It will dominate the

management agenda for the next decades, determine the competitive ance of companies, and determine the very fabric of society and the quality of life

perform-in perform-industrialised nations.

xix

What is productivity or relentless business

improvement?

Most would argue that productivity or relentless business improvement isdoing things faster for less cost This is certainly a measure, and probably themost basic Quality must also be added into this equation, as must customerservice Another measure of productivity is the rate at which an organization

is responsive to market needs, service or product innovation, and its ability tochange as the marketplace demands There is much talk that an automated

BPM implementation can provide an organization with this business agility.

It is imperative for an organization to identify what type of productivity isessential or critical to meeting its strategic goals The easy answer is all of theabove (time, cost, quality, customer service, market responsiveness and busi-ness agility); however, it is difficult for an organization to target all at the sametime, without a structured and planned approach

As we will discuss in Chapter 13, on the Organization strategy phase, Treacyand Wiersma (1997) say that an organization must choose between threestrategic options:

1 Customer intimacy – the best total solution for the customer

2 Operational excellence – the best total costs

3 Product leadership – the best product

They say it is impossible for an organization to be good at all three gic options Organizations must make a choice of one of these dimensions,otherwise they will, according to Michael Porter (1980), become ‘stuck in themiddle’ and will eventually either not perform well or disappear

strate-It is the role of the leaders to select which strategy is the critical one for theorganization, and then identify the business processes to be redesigned, orcreated, to achieve the desired results There is a growing number of leaderswho have identified how critical this is for the achievement of an organiza-tion’s strategies and objectives

This book is about providing organizational leadership with an standing of BPM and its importance to an organization, and how to make ithappen within the organization It is also about providing BPM practitionerswith a framework – and set of tools and techniques that will provide a practi-cal guide to implementing BPM projects successfully

under-However, in reading the book it must be clearly understood that BPM ects are complex activities This is not a book to be read from cover to cover

proj-as a piece of fiction, like a novel; it is a reference book for organizations pleting BPM projects and provides an holistic approach The various phasesand steps in the framework described are complex and highly interrelated,and for the novice BPM project manager will appear overwhelming on firstreading However, once read, studied and used, the complexities and interre-lationships will become clearer and start to fall into place

com-The book is divided into four parts Part I asks and answers ten frequentlyasked questions about business process management (BPM) These questionsare aimed at the business executives of an organization, and take a holistic,

organization-level approach to BPM The questions and the answers providedshould not be interpreted as having to be answered or addressed by an organ-ization before BPM or a BPM project can be started within an organization.The questions are not answered at a project level, but at a program or orga-nizational level They are designed to provide an overall view or understand-ing of BPM and the move towards a process-centric organization.

Part II introduces the framework, and is for the BPM practitioner Itexplains the BPM project framework in detail, which comprises two differentlikely starting points for a BPM project and the selection of four probableproject implementation scenarios These are followed by ten phases and three

‘essentials’ of BPM projects Phases 1 and 2 (Organization strategy andProcess architecture) are predominantly aimed at BPM mature organizationsand need not always be fully addressed before a BPM project can commence.They are at organization and program levels Phases 3 to 10 are project-based,and show the reader the activities and steps involved in the successful com-pletion of a BPM project

The depth and usage of each phase of the framework will depend upon howthe organization determined that a BPM project was necessary and the BPMimplementation (type of project) scenario selected Which scenario is selectedwill be influenced by the BPM and process maturity of the organization andexecutives involved, and the particular circumstances of the organization orbusiness unit initiating the BPM project

Part III is once again aimed at the executives of an organization, and vides insights into how to determine the BPM maturity of the organization orbusiness unit and how to embed BPM within an organization to ensure a con-tinuous business process improvement culture

pro-Lastly, Part IV is back to the practitioners and comprises a series of dices relating to all of the framework phases, which will provide the businessand a project team with practical tools, explanations and assistance in the suc-cessful implementation of a BPM project

appen-The book also includes in excess of fifty case studies to illustrate variouspoints in the book Two of these cases are lengthy, to show how entire phases

of the framework have been used in practice

xxii

It has been a journey for both of us as we have researched and developed thetools and techniques in this book This is not a text written from academicresearch alone The framework, approaches, scenarios, phases, steps, toolsand techniques are what we use in our day-to-day BPM consultancy

However, no book can be written in isolation, and there are many people

we would like to thank who have reviewed, contributed to, critically mented and debated with us These people include: Stephen Dawson, AndrewMcPherson, Richie Hughes, Brett Walker, Wim Hofland and MichaelOosterhout

com-As always there are special people we would especially like to thank.Antje Breer, process and business consultant extraordinaire, has donated asignificant amount of her personal time in reading and re-reading draft chap-ter after chapter, and has spent many hours in robust discussion with us Shehas significantly added to the quality of this book, and her contribution can-not be underestimated; it is very much valued and words alone cannotdescribe our appreciation and respect for Antje and her ability

Nigel Foote, a senior consultant at Adaptra project management services,has contributed greatly to the chapter on project management; he is an out-standing project manager and thought leader in this area

Our thanks are due to Professor Michael Rosemann and Tonia de Bruinfrom Queensland University of Technology and Brad Power from the BabsonCollege at Boston University for their contributions to BPM maturity researchand the chapter in the book We especially thank Michael Rosemann for hisencouragement and advice, and Frits Bussemaker for his contribution toChapter 3 ‘How do you sell BPM technology to the organization’

Finally, we would like to thank our senior editor, Maggie Smith, for hertrust, support, never-ending encouragement and good humor throughoutthis journey

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Part I

Frequently asked questions

The important thing is not to stop questioning

a little confusing and why it is different from what has come before – the tions ‘How do we demystify BPM?’ and ‘What is BPM?’ are answered inChapters 1 and 2

ques-In our experience of implementing BPM projects and programs withinorganizations, it is important to improve the processes before automatingthem This is addressed in Chapter 3

For an organization and for management, it is important to have an standing of when you should do BPM and what the main drivers and triggersare Once management has determined that a BPM project is a good thing forthem to do, they need to ask who should be involved These aspects are cov-ered in Chapters 4 and 5

under-There is much literature about aligning BPM with the organization’s egy and the need for a process architecture, and Chapter 6 explains why thesepoints are so important

strat-It can be difficult for BPM enthusiasts within an organization successfully

to sell the concept to management In Chapter 7, we have asked a successfulEuropean alliance manager of a large BPM software organization to tell ushow it sells BPM to other organizations

Finally, we address three important questions in Chapters 8, 9 and 10.respectively:

● What are the critical success factors in a BPM project?

● What are the critical implementation aspects for a BPM solution?

● Why do you need a structured approach to implementing BPM?

All human progress is preceded by new questions

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2

Chapter 1

How can we demystify business process

management?

Brief history of business process management

The road to Business Process Management (BPM) has been a difficult onethat has gained from the successes and failures of various other attempts atachieving process-based organizational efficiency

Perhaps it is worthwhile taking a few moments to understand a very briefrecent history of management’s focus on business processes

In the 1980s there was a considerable focus on Total QualityManagement (TQM) This was followed in the early 1990s by BusinessProcess Reengineering (BPR) as promoted by Hammer and Champy(1990) BPR had a chequered history, with some excellent successes as well

as failures

Following BPR in the mid- and late 1990s, Enterprise Resource Planning(ERP) systems gained organizational focus and became the next big thing.These were supposed to deliver improved ways for organizations to operate,and were sold by many vendors as the ‘solution to all your problems’ TheERP systems certainly did not solve an organization’s process issues, normake the processes as efficient and effective as they could have been.Towards the end of the 1990s and in the early 2000s, many CRM systemswere rolled out with extensive focus on the customer view and customerexperience While this provided focus on the front office, it did not improvethe back-office processes More recently, Six Sigma has started to come intoits own

According to Hammer (1993), ‘Coming up with the ideas is the easypart, but getting things done is the tough part The place where thesereforms die is … down in the trenches’ and who ‘owns’ the trenches? Youand I and all the other people Change imposed on the ‘trench people’ will

not succeed without being part of the evolutionary or revolutionaryprocess:

Forceful leadership can accomplish only so much The shift from machine-age bureaucracy to flexible, self-managed teams requires that lots of ordinary man- agers and workers be psychologically prepared.

(Hammer, 1994)

The next big thing (or how mystification begins)

Now, we have BPM, yet another three letter acronym!

So why is BPM considered the ‘next big thing’, and why do the ‘next bigthings’ invariably come and go?

There are usually four steps to the creation of a ‘next big thing’:

1 The concept promoters (vendors/analysts, etc.) hype it up to themarket in their advertising, sales pitches, promotional materials,research and successful case studies

2 These promoters then tend to disparage all the ‘old big things’ thathave preceded it, and promote the new big thing as simply the best

3 The next step is to make the ‘new big thing’ very simple so the sion-makers can understand it, the message being that it is not com-plicated and can be easily implemented

deci-4 Finally, the promoters (vendors in particular) market their existingproducts and service offerings with this new label (in this caseBPM), even if the offerings do not meet the generally accepted def-initions of the label This leads to there being almost as many defi-nitions of the label as there are vendors

In this case, the new label is ‘BPM’ and the same problems are beginning

to emerge If you examine the historical ‘next big things’, there is a commonthread running through them: they are all about business processes and try-ing to make them better

Vendors and consultants all latch onto new ideas, which are often

extreme-ly good, and hype them up until the idea matures and is able to be used orimplemented in a sustainable way

BPM hype cycle

The BPM hype cycle in Figure 1.1 shows a summarized view of how theprocess cycle has progressed over the last two decades

Six Sigma was invented in 1986, and created an awareness of ‘processes’

This was followed in July 1990 by Hammer and Champy’s (1990) Harvard

Business Review article ‘Don’t automate, obliterate’, and the business process

reengineering (BPR) movement started While BPM has been around for

some time, BPM: The Third Wave (Smith and Fingar, 2002) created significant

interest and discussion; it could now be argued that BPM is the most tant topic on the management agenda

impor-What is mystifying about BPM?

BPM is advocated by its proponents as being different from and better thanwhat has been available in the past The major advantages promoted are out-lined in Table 1.1, as are our comments supporting or refuting them.BPM is not a simple concept nor is it simple to implement – it is extremelycomplex and difficult

While the introduction of technology can be a useful contributor for manyorganizations, BPM does not always need technology to be successful It is far

more important to get your processes right before you consider the

implemen-tation of technology

The iceberg syndrome

Icebergs typically only show about 10 percent of their mass above the water.BPM is often like an iceberg; people and organizations only see what is abovethe water The interesting observation is that what appears above the surfacedepends upon the viewer’s perception For example, a vendor sees technolo-

gy above the surface; a process analyst sees the processes; human resourcessees change management; IT sees the technology implementation; businessmanagement sees short-term gains (quick wins), cost reductions and simplemeasures of improvement; and the project manager sees short-term comple-tion of project tasks and the deliverables of the project

People often see the ‘perception’ component as the completion of ‘pretty tures’ or process models, whereas ‘reality’ is addressed in the implementation of

pic-Hype ‘Don’t Automate

Obliterate’ (Hammer, 1990)

BPR movement

BPM movement

BPM Third Wave (Smith and Fingar, 2002)

published

Six sigma

Time

Figure 1.1

BPM hype cycle

these processes and the achievement of business benefits An excellent strategy

is of no use unless it is well executed

Unfortunately, a BPM implementation is a multi-faceted activity, andFigure 1.2 shows that ‘reality’ is what appears below the water line Unless all

Table 1.1

Promotion v realityBPM major ‘mystifying’ points versus Reality

1 BPM is better than the past options for process improvement BPM hascertainly raised the visibility of process improvement for many organiza-tions BPM has also focused many academics and consultants back ontoprocesses and several organizations have been created solely to focus onprocess (e.g BPMI.org/BPM Group).This is definitely a good thing, as thediscussion on standards and BPM in general continues to raise its profileand maturity in the marketplace Learning from past experience, such as

BPR, has also been taken into consideration The key point is that BPM is

only as good as the buy-in you get from the organization and management.

2 BPM uses new and better technology There are far too few fully mated enterprise-wide BPM implementations to validate this claim at thispoint in time In our experience, technology should not be the initial focus in

auto-a BPM implementauto-ation.The initiauto-al work should relauto-ate to reviewing the rent processes with a goal of increased efficiency and effectiveness (theimportance of establishing process goals is discussed in more detail in

cur-Chapters 14, 15 and 17).While these new improved processes could

(if appropriate) contain suggestions for automation, significant process

improvements can be achieved without the use of technology People become

carried away with the ‘bells and whistles’ and look at what the technology could do

for the organization, rather than what it needs to do for the organization.

3 There is a robust methodology to support BPM There are methodologiesfor parts of BPM, and few fully developed methodologies for the implemen-

tation of a complete BPM solution Be careful: a methodology or framework can

be a millstone as much as a saviour, it is how you use it that matters

4 BPM is simple (and, in fact, often oversimplified) BPM is anything butsimple.There are many components and elements to a BPM implementa-tion, and one of the purposes of this book is to explain this in more

detail You do not need to solve all the organizations process problems in one

go with BPM Start small, with one project As the organization matures, BPM can be expanded.

5 External people are needed to implement BPM This very muchdepends upon the maturity of the organization and the skill levels and

experience within an organization Certainly external consultants can assist

either in a coaching or consulting role if the organizational maturity and/or skill levels are not sufficient An experienced external BPM project manager can pro- vide significant project focus that, sometimes, internal project managers are unable to bring to a project

the ‘reality’ associated with a BPM implementation is addressed, the risk tothe project increases This ‘reality’ needs not only to be addressed, but alsomade visible to the organization A ship could cruise very close to an iceberg

on one side and not hit anything, and yet do the same on the other side and

sink The visibility of issues and activities is an important part of addressing them.

We will now briefly explore one of these ‘realities’

Exploring ‘reality’

The most important component in any BPM implementation is the ment of organizational change and the associated people (staff) impacts Asmentioned earlier, the implementation and its success are owned by the peo-ple in the trenches People and their engagement in the implementation arecritical, and a holistic approach in meeting the people, cultural and ‘processfactory’ aspects of managing an organization is crucial The key to engagingthe people in the trenches is leadership from their line managers These linemanagers must be engaged first The project manager or project team cannotachieve people engagement on their own (Note: so what is a ‘process facto-ry’? Any organization that has a back-office operation that processes a largevolume of throughput and has a large number of hand-off points could bereferred to as a process factory.)

manage-It is the people who will determine the success (or otherwise) of your BPMproject You can have the most effective and efficient new or redesignedprocesses in the world, but unless you can convince people to use them effi-ciently or at all then you have nothing People need to be included as anintegral part of the development journey They need to be consulted, listened

to, trained and communicated with on a regular basis If they do not stand the processes, the reasons for the new processes and why changes to theexisting processes are necessary, how do you expect people to take ownershipand responsibility for them?

under-People need to understand clearly what is expected of them and how theyfit into the new structure and processes Their performance measures need to

be developed in consultation and agreement with them

What is the role of management in the transformation? While it may seem

obvious that managers need to manage the operation of the organization and process factory, this is in fact not what most managers do in their current posi-

tions In our experience, with rare exceptions, today’s managers spend most

Reality

Perception

Figure 1.2

Perception, the tip

of the iceberg called

‘reality’

of their time reacting to critical situations and treating the symptoms and notthe causes – commonly referred to as ‘crisis management’.

This is not to be critical of managers In general they are well-meaning andhard-working individuals who generally do a great job with the tools they have

to work with There needs to be a considerable effort in any BPM project towork with the management and determine what information managers

require to manage the business You need to ensure that there is a deep and

thor-ough understanding of how the business operates; what reports are required,and how to provide information in a timely manner, to enable managers tomove from reactive to proactive management and then to predictive manage-ment It is this journey of management maturity that provides the organizationwith a long-term continuous and sustainable increase in productivity

Change management and performance measurement

The people change-management components of projects need to address theorganizational culture and modify it towards a new set of management behav-iors that will translate into the behaviors of the people they manage

To support the drive to implement cultural change, managementincentives need to be aligned with the management information available,the process goals and organizational strategy Incentives and targets viaperformance measurement need to be well known and realistic They mustalso allow the best performers to overachieve, and the rewards need to beworthwhile This does not always translate as money incentives; humanresource departments can be very creative in providing other non-monetaryoptions The challenge is how to measure this change in an effective andacceptable way

Conclusion

Many people are still confused about what constitutes BPM, which is not prising when the BPM community itself has not yet agreed on a common def-inition and approach BPM is all about the efficient and effective manage-ment of business processes – people are at the center of business processes,

sur-so make them part of the sur-solution As Stephen Schwarts, from IBM, stated sur-sowell: ‘We had improvement programs, but the real difference came when wedecided it was no longer a program, it was a business strategy’ We believe this

is one of the keys to a successful BPM implementation Without trivializing thework involved in the implementation, the project is the easy part It is theinstitutionalization of process improvement as a fundamental managementpractice that is the key, and this cannot be effectively achieved without the

ability to manage your processes proactively and predictively.

Chapter 2

What is business process management?

This is a question that needs to be asked and addressed right at the very ning to ensure we have a common understanding There are as many answers

begin-to this question as there are vendors, analysts, researchers, academics, mentators and customers

com-We would like to clarify one thing straight away In our opinion, BPM does

not equate to a technology tool or initiative for business processes In our

experience, there is significant business process improvement that can beachieved without technology Can BPM involve technology, and is technology

a good thing? Absolutely, in the right circumstances and when it can be fied Are process modeling and management tools useful for achievingprocess improvements in non-technology circumstances? If the tools referred

justi-to are process-modeling justi-tools, then yes, they can be extremely useful in thisprocess In fact, it is difficult to complete complex process improvement proj-ects in a time-effective manner without the use of these tools

One word of caution: there is a danger of organizations believing that once they have purchased a process-modeling tool, it will solve all their problems and the process improvements will just follow Nothing could be further from the truth A process-mod- eling tool is just a piece of software, and without a methodology or framework, skilled resources to use it and a genuine commitment from organizational leadership, it is useless.

Refer to Appendix L for how to select a process-modeling tool

BPM is just like many other three-letter abbreviations in the recent past,such as CRM and ERP, which have been misused and misinterpreted.Currently, BPM is being used by:

● some vendors who only focus on the technology solution of processimprovement

● other vendors who think of BPM as business process modeling orbusiness performance management

● some consultants who use BPM to continue their message on ness process reengineering

Organization The organization in this context refers to an enterprise or

parts of an enterprise, perhaps a business unit that is crete in its own right It is the end-to-end business process-

dis-es associated with this part of an organization.This end focus will ensure that a silo approach does not develop.Objectives The objectives of a BPM implementation range from the

end-to-strategic goals of the organization through to the individualprocess goals It is about achieving the business outcomes

or objectives BPM is not an objective in itself, but rather ameans to achieving an objective It is not ‘a solution lookingfor a problem’

Improvement Improvement is about making the business processes more

efficient and effective

Management Management refers to the process and people performance

measurement and management It is about organizing all theessential components and subcomponents for your processes

By this we mean arranging the people, their skills, motivation,performance measures, rewards, the processes themselves andthe structure and systems necessary to support a process.Control BPM is about managing your end-to-end business processes

and involves the full cycle of plan–do–check–act (Demingcircle,Walton, 1986).An essential component of control is

to have the ability to measure correctly If you cannot ure something, you cannot control and manage it

meas-Essential Not every process in an organization contributes towards

the achievement of the organization’s strategic objectives.Essential processes are the ones that do

Business An implementation of BPM must have an impact on the

ness by delivering benefits It should focus on the core ness processes that are essential to your primary businessactivity – those processes that contribute towards theachievement of the strategic objectives of the organization.Processes What is a process? There are as many definitions of process

busi-as there are processes One we agree with is RogerBurlton’s, where he says that ‘a true process comprises allthe things we do to provide someone who cares with what

they expect to receive’ (Burlton, 2001: 72) This covers a

true end-to-end process, from the original trigger for theprocess to the ultimate stakeholder satisfaction Burltonadds that the ‘… final test of a process’s completeness iswhether the process delivers a clear product or service to

an external stakeholder or another internal process’

● some managers who want to jump on the BPM bandwagon, with noidea where it is going

● some process analysts who use BPM to inflate their ing aspirations

process-model-Many of the industry commentators and vendors provide definitions thatspecify technology (automation tools) as an essential component of BPM – infact, they say that BPM is technology However, if you take a simple and com-

monsense view of BPM, it is obviously about the management of business processes.

With this simple statement in mind and the organization the primary focus,

we would suggest that BPM is:

The achievement of an organization’s objectives through the improvement, management and control of essential business processes.

It is important to have a common understanding of what we mean by each

of the italicized words in our definition, so each is defined individually in

Table 2.1

We are happy to see that there is currently a movement towards an ment that BPM is about the management of business processes Paul Harmon,

agree-of Business Process Trends, recently defined BPM ‘as a management discipline

focused on improving corporate performance by managing a company’s ness processes’ (Harmon, 2005a)

busi-Thus, process management is an integrated part of ‘normal’ management

It is important for leadership and management to recognize that there is nofinish line for the improvement of business processes; it is a program thatmust be continually maintained

BPM is:

● more than just software

● more than just improving or reengineering your processes – it alsodeals with the managerial issues

● not just hype – it is an integral part of management

● more than just modeling – it is also about the implementation andexecution of these processes, which requires analysis

Last but not least, as a management discipline BPM requires an end-to-endorganizational view and a great deal of common sense, both of which canoften be in short supply

Chapter 3

Why is it important to improve business

processes before automating them?

The first rule of any technology is that automation applied to an efficient ation will magnify the efficiency.

oper-The second is that automation applied to an inefficient operation will nify the inefficiency.

mag-(Bill Gates, Microsoft Corporation)Humans are attracted to easy solutions to complex problems In the busi-ness world we learn to solve problems quickly and move on fast When we can’tget our work done quickly enough, we’ve discovered we can automate! In theoffice we’ve perfected this ability over the past 100 years to the point that wenow automate almost everything in order to get more done faster – first letter-writing, then book-keeping, reporting, inventory, sales and order processingand, more recently, business workflow and document management Thus,when confronted with productivity, efficiency and business control issuestoday, our first temptation is to buy an automated solution to our problem

So, what’s the problem?

Businesses today, especially large organizations with complex service ucts, are realizing that there’s only so much their IT systems can achieve inimproving their business operations Even where core systems are effectiveand efficient (which is not always the case), it is becoming increasingly diffi-cult further to improve the overall operating efficiency and customer serviceeffectiveness to the extent necessary to meet customer and shareholderexpectations at a rate faster than our competitors Even Bill Gates, the ulti-mate advocate of technology, notes that automation is only effective whenapplied to efficient operations

prod-So, having solved the immediate challenges of automating operationalbusiness systems and having achieved most of the ‘easy’ systems benefits,organizations are now turning to some of the more difficult and systemicoperational efficiency areas to achieve their required ‘step change’ businessimprovement benefits: the operational back-office processes themselves.

What is our intuitive solution to these age-old areas of inefficiency? Automate

them! After all, it worked for systems throughput and productivity, and there

are now plenty of vendors keen to provide automated workflow and ment imaging solutions – often ‘out of the box’ – for your industry or envi-ronment

docu-Why isn’t this working?

There are often two reasons why this isn’t working The first we refer to as the

black box syndrome, where executives see their processes as a ‘black box’ They

don’t know the details, but somehow the processes produce outcomes Theexecutives have a feeling that these processes may not be as efficient or aseffective as they could be (quality and rework are not measured), but at leastthey work, and managers are afraid to change anything because change mightdisrupt these fragile ‘black box’ processes – and fixing a problem is toughwhen you do not understand it Automating the ‘black box’ is therefore easier,because it becomes a project and businesses ‘do’ projects

The second reason we refer to as the looking at the edges syndrome, where the

processes and associated people are treated like sacred objects: executivescannot or do not want to discuss the efficiency and effectiveness or ask thetough questions They keep ‘looking at the edges’ of the problem and not atthe heart – solving symptoms rather than the cause For these organizations,bringing in a new technology sounds so much easier because there is no talkabout people or processes – just technology

If business process inefficiencies could be easily solved by automatingthem, why are consultants often called in after an organization has purchased

an expensive automated workflow solution that has failed to ‘solve’ the lem? Why do automated solutions fail to deliver their expected business ben-

prob-efits? In fact, often organizations experience an increase in paper work or

increased rework and diminished quality following automation of key business

processes and workflows

Why do automated solutions fail to deliver expected benefits?

The answer lies in Bill Gates’ observation Automating something doesn’t fixits underlying problems; it just helps them to occur more quickly, in vastlyincreased numbers and at greater frequency The notion that ‘we’re going toreplace what’s broken with something much better’ is almost never realized

in a mature organization, owing to the difficulty of making instant process

and cultural change on a broad scale while still running the business At best

a compromise solution is achieved, often following sizable project over-runs

in time and cost budgets At worst, the project fails completely and the status

quo is maintained In both cases, the expected benefits are not realized and

employee and customer satisfaction levels may decline dramatically

The obvious question would seem to be, ‘Why don’t organizations fix their

processes before they look to automation solutions?’

In most large organizations, the basic back-office processes have remainedpredominantly unchanged for many years – even decades In the financialservices industry, for example, basic banking, insurance and investment pro-cessing procedures have been passed down for generations

Historically, organizations haven’t been able to fix their operational office (business processes) easily because they are perceived as being eithereasy (and all we need to do is automate them to make them faster and takepeople out of the equation as much as possible) or hard (and too difficult formanagement to fix because they do not have the expertise, and the tempta-tion is to purchase a solution which will ‘solve’ the problem – so back to theeasy option)

back-What have we learned from history?

In Chapter 1, we learned that none of the management trends of TQM, BPR,CRM, ERP or Six Sigma has delivered the total solution to the business bene-fits that an organization requires in their back-office operations areas So whatmakes today’s management think that BPM automation will be any different?BPM automation has the potential capability to contribute towards achiev-ing success, if the processes are improved first and all other aspects of a BPM

project are addressed But are we addressing business process improvement change

correctly?

Organizations have said: ‘we have been doing continuous improvement foryears, so we are already in a position to automate’ Well, have they? Is contin-uous improvement the appropriate strategy, and has continuous improve-ment really dealt with the causes rather than just the symptoms?

Continuous improvement, even if appropriate, is an extremely difficult gram to implement ‘continuously’, year after year It requires managers to be

pro-in control of their buspro-iness, and unfortunately most managers are not pro-in

con-trol of their business They mainly provide what has been referred to as aid’ management, whereby they continually fix issues and problems for theirstaff and the business The real issue is how much of their time is actually spent

‘band-on preventi‘band-on of problems by addressing fundamental process improvements.There is a simple measure for this, and it is the answer to the question,

‘how many of your critical business processes or process steps rely on sheets?’ It is the Spreadsheet Index Many organizations would fail to functioneffectively if spreadsheets were taken away When they are used to manageprocesses, the business has the potential to lose control as each person createstheir own versions or ‘control’ mechanisms If used for critical businessprocesses, the information cannot be easily shared and controlled Adequatesystems should make the use of spreadsheets unnecessary

spread-Another indicator is to take a minute and answer the following questionstruthfully:

1 Are your managers introducing new spreadsheets and small satellitedatabase solutions into the processes, or business units, they manage?

2 Are your managers predominately focused on short-term tacticalissues, and not process improvement based upon root cause analysis?

3 Is quality measured by periodic sampling?

4 Is your backlog growing, or at least not reducing?

5 Do your managers and you have no accurate measure of the level ofrework within your organization and departments?

6 Do you have no idea what this rework costs the organization?

7 Does your organization have no accurate knowledge of the actualcost of executing a transaction or process?

8 Are your staff performance measures mainly focused on measuringthroughput?

9 Are your managers primarily focused on cost reduction?

10 Are less than 80+ percent of projects completed to realize the fits outlined in the business case?

bene-11 Are your processes just focused on internal aspects?

If the answer to any of these questions is ‘yes’, then you and your managersare not managing the business processes By addressing these types of ques-tions, the organization will be getting to the root cause of process issues and tak-ing the first steps towards a continuous business process improvement program

Conclusion

Management, at the operational level, is predominantly about the ment and control of the processes essential to your business to achieve theobjectives of the organization Setting the direction and goals for businessprocess improvement is a critical step, and one that needs to be addressed byhigher management

improve-While the introduction of technology can be a useful contributor for manyorganizations, business process improvement does not always need technology

to be successful It is far more important to get your processes right before you consider the implementation of technology In our consulting engagements, we

find that the majority of improvements in the short term can be achieved without automation.

It is executive management’s responsibility to ensure there is a clear linkbetween the process improvement projects undertaken by the business, andthe organization’s strategy and objectives If the project cannot make a strongcase on how it contributes and adds value to an organization’s objectives, theproject should not be undertaken